A Very I,I,I,Interesting Housing Market... but still Strong

 So what's happening in the Las Vegas Real Estate Market?

Good question...  In an attempt to lower Inflation,  

the "Federal Reserve Bank" has Raised Interest Rates. 

 Interest Rates are now near 7%, a 21 year high! 

This is definitely making it harder for first time buyers.

 

Home Owners with 3% Mortgage Loans are waiting to sell,

because then they would have to qualify for a new 7% loan.

This is causing a Shortage of available Inventory. 

Normally Low Inventory would cause Prices to Rise,

but over the last couple of weeks, Prices have begun to trend downward.

This is likely a Seasonal Trend that happens every year.

 

Last Year we talked about the 3 I's

 Inventory, Interest Rates & Inflation. 

This Year we have another, Investors.

A majority of our recent Sales have been to Investors.

Investors still see Las Vegas Home Prices as a deal. 

Especially when compared to California Prices.

 

There are many factors to think about when trying to predict 

what will happen to Las Vegas Homes values.

Some of the issues we hear about are;

- Inventory, Inflation, Interest rates & Investors

- Concerns of a potential Recession 

- the upcoming Political Election

New Home Builders have to deal with

- Energy and Labor Costs 

- Material Shortages and Supply Chain Issues

 

It seems no matter what issues arise in the short term,

 in the long run Home Values continue to rise.

If you are thinking about buying or selling,

please reach out to us.

You might want to Buy Now before the next Feeding Frenzy...

If you haven't heard, Home Prices are Going Up. 

Why?   Low Inventory...

Inventory has been dropping steadily since September of last year.

Why?   Fewer and fewer people are Selling.

Why?  Because many of them have Mortgages with Interest Rates around 3%.

If they Sell, they have to Qualify for a New Loan at Current Market Rates near 6.5%

For most people it just doesn't make sense...

 

This has caused Median Home Prices in Henderson to go up 8% since January.

 

 This has caused Median Home Prices in Las Vegas to go up 6% since January.

Meanwhile, Interest Rates have been fluctuating between 6 % - 7 %.

FYI... Had you Refinanced back in August 2021, you could have got a rate of 2.78%

So who is Buying all these Homes?

The Californians, we are still A Deal to them.

Investors. They pay CASH and they see what's happening. 

Rents are going UP and Values are going Up.

It's a No Brainer...

 

 Rents have been going up for the past 10 years.

In the past 3 years, Rents are up 36%.

Wages / Incomes haven't gone up that much. 

Who should be Buying Now?  

Anybody paying Rent...

Even though Prices are Rising, There isn't the "Feeding Frenzy" we had in previous years. 

And most Sellers are willing to assist with Closing Costs.

The payment might be rough at first, but it is a least going towards building equity.

Mortgage Interest costs are a large Tax Write Off for Home Owners.

And down the road, you will likely be able to Refi into a lower rate.

If you don't Buy now, when Interest Rates do go Down and everyone wants to Buy,

the Feeding Frenzy is going to make it even Harder to find a Home you like...

 

 

 

Looks like things might be turning upward...

It's been a long time since we have shared anything positive about our local Real Estate Market.

For the first time in almost a year the Median Home Prices have gone up.

Las Vegas, Henderson and NLV all show a distinct change into an upward trend.

 

 

 

It's not because of Interest Rates. 

Mortgage Rates have been fluctuating from between 6% - 7% for the past 6 months.

 

 

We have a very Strong Economy.

Almost all Economic Indicators show positive movement over the past year. 

 

Tourism & Gaming numbers are better than ever!

 

Las Vegas Metropolitan Area is the Strongest in the Nation for Employment Growth.

 

Much of our growth is thanks to Companies leaving California, 

and Las Vegas is their #1 destination.

 

The Las Vegas Economy and it's Real Estate Market remain Strong.

 Despite Interest Rates doubling, the Housing Market is only down by 12%

We will keep an eye on it...

Looking Back at 2022 - but not really looking forward to 2023...

The most popular question we get is, 

"What is going on in the Real Estate Market?"

Followed by "What Happened?" and then "What's going to happen Next?"

 

Let's start by Looking Back at Interest Rates in 2022.

In January of 2022, Rates where at 3.1%

In an attempt to get Inflation under control, the Fed began to raise rates.

By October the Rates hit a 12 year High of 7%

This caused the Real Estate Market to Slow Down Rapidly.

A Buyer wanting to buy a $500,000 with 20% down would have a $400,000 loan.

The difference between the 3.1% loan and the 7% loan is $953 /month.

Many Buyers No longer qualified for the loan.

 

This had a huge affect on Home Prices.

Median Sales Prices had been on the Rise.

In 2019 and 2020 they were $300,000

In 2021 they hit $343,000. Up around 7% per year.

From 2021 to 2022, Prices went up 27% to $435,000 

In 2022, Prices were Up 12% by May.

And that's when the Interest Rates went above 5%.

Since then, Prices have dropped to $420,000, down 14%

This had a huge affect on the Number of Closed Sales.

Over the past few years we had been 

averaging around 8,000 transactions a month.

In December 2022, we only had just over 4,000.

 

Fortune Magazine writer Lance Lambert wrote an article compiling 

the Housing Forecasts of 27 of our Nations leading Housing Researchers. 

Of these 27, only 4 thought Prices would go Up.

The most optimistic was Realtor.com who said prices would rise 5.4% in 2023.

 At the opposite end where Zonda, AEI, CoStar, KPMG, Yieldstreet, 

Pantheon and John Burns RE who all stated 

Home Priced would drop between 15% - 20% in 2023.

 

The year ahead is a question mark. With the FED poised to slow (not stop) interest rate hikes we will see how this effects buyers loans moving forward. 

If you or someone you know is considering making a move,

please give them our number and discuss options.

 

Rising Interest Rates having an Affect on Market

The Big Question, What is happening to Our Real Estate Market? 

Over the Past Few Years Home Prices have been on the Rise.

Until June of this year when Interest Rates went to 5.81%

Since then Home Prices have been dropping.

 

 

In the past Year, Mortgage Interest Rates have Risen from 

2.77 % in August 2021 to 5.81% in June 2022.

Currently Rates are 5.22%

To emphasize what that means to Home Buyers, 

we will use an example of purchasing a Median Price Home in Henderson.

Current Median Home Price is $600,000

$600,000  -  Purchase Price

$120,000  -  20% Down Payment ( To Avoid Paying PMI )

$480,000  -  Loan Amount

 

With an Interest Rate of 2.75, the monthly payment would be $1,960 

With an Interest Rate of 5.75, the monthly payment would be $2,801 

This is Payment and Interest. ( Not Including Taxes, HOA and Insurance )

A difference of $841 a month.

 

This has a lot of Buyers taking a step back to wait and see what happens.

 

Some good things that are happening because of this are;

 - Home Prices are Dropping

- Inventory is Increasing

Picky Buyer, with more Inventory, you are more likely to find your Dream Home.

And when Interest Rates go back down, You can Refinance into your Dream Loan.

 

Call us if you have any questions. 

 

The 3 ( I )'s Affecting the Housing Market

 Inventory, Interest Rates & Inflation

So what's happening in the Real Estate Market?

The quick answer is that a Low Inventory of Homes is driving up Home Prices. 

Rising Interest rates are making Payments on these Homes Larger.

And Rising Inflation makes everything cost more leaving 

Buyers with less money to spend on Home Payments.

 

 

Since the Summer of 2019, 

Inventory of Available Listings has dropped from 5,500 to under 1,400.

In that same time Home Prices have Risen from $350,000 to almost $600,000

 

At the Beginning of 2022, Interest Rates were 3.11%

On a Median Home Price of $600,000

You would have a P&I Payment of  $2,565

Now at 5.3% that Payment would be $3,332

$767 more every month.

The Median Household Income for Nevada is under $100,000

Inflation is currently at 8.5%. This means that all the items you 

spend money on cost 8.5% more than they did one year ago.

In 2021, Inflation was 7 %. That means that all the items you 

spend money on cost 15.5% more than they did two years ago.

To Summarize, if you had purchased a Median Home in 2019, 

when everyone was predicting a Housing Slump caused by Covid Crisis, 

and a Median Home Price was $350,000 and Interest Rates were 3%.

You would have a Mortgage Payment near $1,475.

Now with Inflation being more than 15% Higher than back then.

You can buy a Median Home for $600,000 with an Interest rate of 5.25%

And Pay a Monthly Mortgage payment of $3,313

 

Are these Prices Sustainable?

Time will tell...

Higher Home Prices - It's All about Your Perspective...

The Big Question these days is,

"How can we Sustain these High Home Prices?"

To us here in Clark County, these Prices seem "Crazy"

In the past Year the Median Home Price have gone up,

Henderson 24%

Las Vegas 42%

N Las Vegas 66%

Who is paying these Astronomical Prices? 

The Californian's... Of course!

 

From there perspective, Las Vegas Prices are Incredibly Affordable.

Scroll down and you will see the Median Sales Prices for 

the 4 of the Largest Cities in California.

Looking at these numbers, California's Median Prices have either 

dropped or stayed almost the same over the same period.

Now that people can work from Home,

it makes sense to Live in a more affordable and more fun location.